What's my liability on a company credit card

August 2010

"I have a company credit card and usually run up $10-$15,000 a month in travel expenses. I know the company is cash-poor right now, so I want to make sure that I have no liability for these expenses if the company goes under. Am I safe?"

Mike: Don't count on it. Well-capitalized businesses typically protect their employees by depositing cash collateral with their credit card companies to cover credit card obligations. Since your company is cash-poor, it probably hasn't done that, and the card account is most likely guaranteed personally by an officer.

If your company goes bust, the credit card company will look first to the company itself for reimbursement, then to the officer who guaranteed the card--and finally to the individual cardholders. And credit card companies can be merciless. I've seen a few cases where junior managers found themselves on the hook for thousands of dollars in equipment purchases and travel expenses when their companies defaulted on a "corporate" card.